21st Sep 2006 07:03
Premier Oil PLC21 September 2006 Press Release Premier Oil plc Interim Results for the six months to 30 June 2006 Highlights • Premier operated exploration successes in Indonesia and Vietnam • Five out of seven exploration successes in the first half • Acquisition in North Sumatra with development and exploration upside • Profit after tax up 64 per cent to $33.7 million (2005: $20.5 million) • Operating cash flow up 218 per cent to $172.3 million (2005: $54.2 million) • Net cash of $43.8 million against year end net debt of $26.2 million • Production of 33,521 boepd (2005: 34,779 boepd), up from 2005 full year average of 33,255 boepd • Significant progress on new gas contracts in Pakistan and Indonesia Regional Outlook Asia North Sea • Lembu trend appraisal and • Froy development plan on track Anoa oil finds • Peveril well in 4Q • Dua and Swan development studies • Applications in UK and Norway • Blackbird exploration well licensing rounds results in 4Q • North Sumatra development planning Middle East-Pakistan West Africa • Continuing production growth • Seeking to optimise Chinguetti development • New gas contracts and field expansion • Tiof development studies • New business focus in the region • High impact exploration in Guinea Bissau and Congo Simon Lockett, Chief Executive, commented: "Premier has delivered exploration and operational success and furtherstrengthened its financial position during the first half of the year. We aredelighted to announce further positive drilling results today. Our growth plansare on track and we are now entering a period of high impact exploration withkey wells in Vietnam, UK, India and Guinea Bissau." There will be an analyst presentation on Thursday 21 September at Premier'soffices, 23 Lower Belgrave Street, London SW1W 0NR starting at 10.00 am. A copyof the presentation will be available on the Company's website:www.premier-oil.com. Thursday 21 September 2006 ENQUIRIESPremier Oil plc Tel: 020 7730 1111Simon LockettTony Durrant Pelham PRJames Henderson Tel: 020 7743 6673/07774 444163Gavin Davis Tel: 020 7743 6677/ 079101 04660 CHAIRMAN'S STATEMENT Our high quality assets have produced excellent financial results; we aregrowing through successful exploration, new developments and acquisition. Premier has produced an excellent set of financial results benefiting from ourstrong current producing asset base and a disciplined approach to expenditure. Operating profits were increased by 81 per cent to $110.1 million and netprofits were increased by 64 per cent to $33.7 million. With strong positive netcash flow we have a net cash position of $43.8 million at 30 June. Our exploration activity was successful in the first half, with three positiveresults in Indonesia and an encouraging start to our programme in Vietnam. Intotal Premier participated in seven exploration and appraisal wells in theperiod, of which five encountered hydrocarbons. This success has continued intothe second half. We have a portfolio of development projects across the group, on new andexisting fields, on which we have made good progress and which we are confidentwill drive our medium-term growth plans. In what is a highly competitive market for assets, we are pleased to havecompleted the acquisition of an interest in North Sumatra block A. This is aprolific oil and gas block with strong government backing for the earlycommencement of a gas development project. Our focus on maintaining world-class health, safety and environmentalperformance continues. We achieved 2.5 million manhours with no lost timeincident for offshore and onshore in April 2006. We retained OHSAS 18001 and ISO14001 certification from ERMCVS for our drilling programme in February 2006. InJuly 2006 we received the OSHAS 18001 certification and retained ISO 14001certification for our production business. We are delighted to welcome a new non-executive director to the Board. ProfessorDavid Roberts joined the Board on 28 June and brings with him over 30 years ofexperience in all aspects of exploration worldwide. I am grateful for many yearsof advice and assistance from our two retiring non-executives, Azam Alizai andIan Gray who recently left the Board. Outlook Premier's strategy of adding value through both exploration and development ofexisting reserves is firmly in place. Each of our four regional businesses areexpected to contribute to meeting our medium-term growth target of at least50,000 boepd. We have added a number of key senior employees across our businessunits to ensure delivery of this target. It is pleasing to record our exploration successes in the first half of theyear. In addition, our team has worked extremely hard to secure rigs for all thekey wells in 2007 in what is a challenging service market. Through portfoliomanagement, we expect to maintain high levels of activity within a disciplinedexploration spend. The next 12 months will see a continuing high level ofexploration activity with key wells in Vietnam, UK, India and Guinea Bissau. Sir David JohnChairman FINANCIAL REVIEW Income statement Profit after tax in the period to 30 June 2006 increased to $33.7 millioncompared with a profit of $20.5 million for the corresponding period last year.The rise reflects higher realised oil and gas prices and strong control over ourcost base. Profits are reduced by $16.0 million of mark-to-market hedging losseswhich have no cash flow impact on the group. Group production, on a working interest basis, was 33,521 barrels of oilequivalent per day (boepd) (2005: 34,779 boepd), slightly higher than the fullyear average for 2005 of 33,255 boepd. This increase reflects commencement ofproduction from the Chinguetti field in Mauritania and a strong performance fromour gas business in Pakistan, partially offset by lower production from severalof our UK fields. On an entitlement basis, group production for the period was31,000 boepd (2005: 30,400 boepd). Premier's realised average oil price for the period was $66.52 per barrel, a 1per cent premium to average Brent crude prices. This compared to $38.08 in thecorresponding period, which was impacted by now-expired hedging transactions.Realised gas prices increased overall by 56 per cent to $5.26 per million cubicfeet (mcf) compared to $3.38/mcf in 2005. The net effect of sales volume andprice changes was to increase turnover to $219.6 million (2005: $149.3 million). Cost of sales increased in the period to $85.5 million (2005: $73.7 million).Included in operating costs was a $9.2 million charge in settlement for thedisputed Avenants relating to our two Production Sharing Contracts (PSCs) inMauritania. Excluding this one-off cost, underlying unit operating costs were$5.2 per barrel, down 19 per cent on the corresponding period due to reducedoperating costs on Kyle production. The total amortisation costs were $41.8million up $9.7 million on the corresponding period mainly due to first timeinclusion of amortisation charges for the Chinguetti field in Mauritania. Following our change to an IFRS successful efforts based policy during 2005,pre-licence exploration costs and unsuccessful exploration costs are written offin the period in which they are incurred. In the first half of 2006, theexploration write-off amounted to $9.2 million(2005: $2.1 million). This included the write-off of $7.0 million relating toEgyptian exploration where the focus is now on the potential development of ourAl Amir-1 2005 discovery. Interest revenue and finance gains for the period were $1.9 million offset byfinance costs and other finance expenses of $20.5 million mainly resulting fromthe mark-to-market hedging losses totalling $16.0 million. Such accountinglosses arise as oil and gas prices increase, however in the current range of oiland gas prices they will not have any cash flow impact on the group. Taxationcharges at $57.8 million were higher than the charges reported for the firsthalf of 2005 ($41.5 million) reflecting higher operating profits and higher taxrates in the UK. Cash flow Cash flow from operating activities amounted to $172.3 million in 2006 (2005:$54.2 million). Capital expenditure for the period was $95.9 million (2005:$62.0 million). Capital Expenditure ($ million) 2006 Half Year 2005 Half YearFields/developments 39.5 33.5Exploration 39.0 28.1Acquisition 17.0 -Other 0.4 0.4Total 95.9 62.0 The principal development projects were the Chinguetti field in Mauritania, theWest Lobe platform development in Indonesia and the Zamzama Phase 2 project inPakistan. Exploration costs of $39.0 million for the half year do not take intoaccount proceeds from the farm-out of an interest in block 12 in Vietnam whichwill be realised on completion of the current drilling programme. Net cashinflow, after capital expenditures, amounted to $69.8 million (2005: $7.8million outflow). Net cash at 30 June 2006 stood at $43.8 million compared tonet debt of $26.2 million at 31 December 2005. Hedging & risk management The group has maintained its policy of securing floors for its future productionwhere it can do so on attractive terms. This is typically achieved on a zerocash cost basis by selling upside above given ceiling prices. As oil and gasprices have risen during 2006, we have taken the opportunity to raise the flooron existing hedges and extended coverage out until 2012 whilst maintaining zerocash outlays. At 20 September 2006, the group has 9.3 million barrels of dated Brent oil and660,000 metric tonnes of High Sulphur Fuel Oil (the basis for Indonesian gasprices) hedged at an average floor of $38.76 per barrel with a cap of $100 perbarrel and an average floor of $245 per metric tonne with an average cap of $500per metric tonne respectively. OPERATIONAL REVIEW ASIA During first half 2006 progress was made with each of the key strategic themesin Asia. Success with both exploration and acquisitions was underpinned by asolid production performance while new development opportunities continued toadvance. Production & Development In first half 2006, the Premier operated block A in Indonesia sold an overallaverage of 130 billion British thermal units per day (Bbtud) (gross) from itsgas export facility while the non-operated Kakap field contributed a further 70BBtud (gross). Oil production from Anoa averaged 2,816 barrels of oil per day(bopd) (gross) and from Kakap averaged 7,095 bopd (gross). Overall, net production from Indonesia amounted to 11,644 boepd (2005:11,766 boepd), with Anoa and Kakap contributing 7,957 boepd (2005: 8,156 boepd)and 3,687 boepd (2005: 3,610 boepd) respectively. The West Lobe wellhead platform was completed slightly ahead of schedule on18 May 2006. The jacket, deck and pipeline were installed and hooked up duringApril and May. Commissioning of the hydrocarbon systems was accomplished usinggas from the AGX platform. Drilling is now under way with tie-in of thedevelopment wells scheduled for completion at the end of the year. Negotiations continued over the sale of further gas from block A withprospective buyers in Singapore. We currently assess Singapore to be the optimalmarket for new gas sales where new petrochemical plants are planned. We alsomaintain a watching brief over other possible markets on the Indonesian islandof Batam. In April 2006, together with our partners Medco and Japex, we acquired a 50 percent working interest (Premier share 16.7 per cent) in the North Sumatra block APSC onshore Indonesia, which has undeveloped discoveries certified as holdingover 650 billion cubic feet (bcf) gross of proved and probable reserves. Gassales negotiations and development studies are under way. In India, detailed discussions with joint venture partners and governmentrepresentatives have continued with respect to the Ratna field development.Progress has been made towards formal approval of the production sharingcontract. Exploration & Appraisal The Macan Tutul-1 and Lembu Peteng-1 operated exploration wells in Natuna Seablock A, Indonesia, were successfully drilled in the first quarter of 2006. Bothdiscovered hydrocarbons and are now the subject of appraisal and developmentstudies. Recent technical work has been focused on finalising the well programme for thesecond half 2006 development and appraisal campaign, and preparing for the 2007drilling campaign. In the period to year-end, four development wells will bedrilled on the West Lobe platform, and an appraisal well is planned to follow upthe successful Lembu Peteng-1 exploration well. In preparation for the 2007 campaign, work has continued in maturing theTengilling-1 exploration prospect which is located nearby the Anoa producingfacilities, and finalising the Gajah Puteri-3 well which will appraise theGanesha fault block on the Gajah Puteri field. The Gajah Puteri field is locatedsouth of the Lembu Peteng-1 discovery and may present a future combineddevelopment opportunity. In Vietnam, we commenced the drilling programme on the Dua structure with theDua-4x well. This confirmed the presence of oil and gas in the northern segmentof the structure. Subsequently we drilled the successful Dua-5x well, the keytest well to determine if hydrocarbons are present in the southern segment ofthe Dua structure. Following the testing of the Dua-5x well, we will immediatelydrill the Blackbird exploration prospect to the west of Dua. This is a test of asubstantially larger structure than Dua. In India, preparations for the drilling of the two trillion cubic feet (tcf)Masimpur prospect in Cachar progressed with the award of a rig contract for upto three wells on the block. The first well is targeted for the fourth quarter2006. MIDDLE EAST-PAKISTAN Premier is intent on building a material position within this region. At presentwe have a growing production portfolio in Pakistan and a foothold explorationposition in Egypt. We aim to expand by acquisition and by accessing newexploration opportunities. Production & Development Pakistan production in the first half of the year reached a new record level of12,168 boepd, some 3 per cent higher than the previous record achieved in thecorresponding period for 2005 (11,805 boepd). This reflects our ability to takeadvantage of growing gas demand using the existing developed fields. Qadirpur production was 3,995 boepd (2005: 3,983 boepd). The plant capacity isbeing further enhanced from the current 500 million standard cubic feet per day(mmscfd) to 600 mmscfd. Negotiations are in progress with the gas buyer (on thebasis of an agreed term sheet) to increase the gas sales by a further 100 mmscfdwith the additional production expected on stream in January 2008. At Kadanwari, production of 1,183 boepd was slightly lower compared to the firsthalf of 2005 (1,205 boepd) due to natural decline. The delayed K-15 well has nowbeen completed and started production in August. Evaluation of Kadanwari 3Dseismic has generated further new prospects in the field and K-16 is planned tobe drilled in the fourth quarter of 2006. Additional production from K-15 andK-16 will potentially increase the Kadanwari field production in 2007 by around800 boepd (net). Kadanwari-17 and 18 are also planned to be drilled in 2007. Zamzama production averaged 4,063 boepd during the current period (2005:3,735 boepd). After signing of the Gas Sales Agreement (GSA) the Zamzama Phase 2development project is being implemented for the sale of an additional150 mmscfd, with first gas expected on schedule in third quarter 2007. Bhit field production was 2,927 boepd during the current period (2005:2,882 boepd). The Bhit Phase II Supplemental GSA has been initialled and iscurrently awaiting formal signature. Bhit plant capacity will be enhanced to315 mmscfd, to allow accelerated production from the Bhit field and productionof Badhra reserves effective from January 2008. A GSA for the sale of 22 mmscfd gas from the Zarghun South field, in whichPremier has a 3.75 per cent carried interest, is also approaching signature. Exploration & Appraisal In Pakistan, the high-impact Indus E block well has been delayed to 2007 toavoid drilling during the monsoon season. This is a highly prospective area andthis well could open up a hydrocarbon province offshore Pakistan. Newexploration opportunities within Pakistan are being reviewed and we plan toreturn to onshore exploration during 2007 and 2008. In Egypt, drilling of the Al Amir-2 well, an appraisal of the 2005 Al Amir-1discovery, commenced in late May. At the end of June, the well was being tested.Subsequently, although the well encountered hydrocarbons, the flow rates weredeemed insufficient to be commercial at this location. Work is now beingundertaken to determine the commerciality of the earlier Al-Amir discovery. In line with the expansion strategy, we have substantially increased our newventure activity in Egypt during the first half of 2006, participating ingovernment bid rounds as well as seeking farm-in and acquisition opportunities.During July, the company submitted a bid for a licence in the current EGAS roundof licensing applications. NORTH SEA Premier will build its position by expanding its exploration portfolio andseeking high impact exploration drilling opportunities while maximising thevalue from its existing production and development assets. Production & Development Production in the UK amounted to 7,081 boepd (2005: 11,208 boepd) representing21 per cent of the group total (32 per cent in 2005). The decrease, relative tothe first half of 2005, is due to a combination of natural decline, fieldofftake reconfiguration and operational problems that have occurred during thefirst six months of the year. The Wytch Farm oil field contributed 3,255 boepd net production to Premier, down19 per cent on last year. Production was adversely impacted by problems with thegas plant and with two of the production wells. During the period there was acontinued high level of activity, with five workovers successfully completed, anumber of wells returned to production and a new well, M07, brought on stream.In addition, a new Bridport well is currently being drilled and is expected todeliver first production by mid-November. Longer term, the operator continues torefine the five year drilling programme and is currently evaluating EOR testresults and options for the development of the offshore 98/7-2 discovery, nowofficially named Beacon. Net production from Kyle was 2,062 boepd, down 43 per cent on last year as aconsequence of reduced gas production following the change of export route toBanff. This change has significantly reduced operating costs for the field. Kyleoil production was above budget during the first half of 2006, and should befurther enhanced in the second half of the year by a water shut-off andre-perforation of the K15 well. A gas lift project has been sanctioned for thefield and a vessel secured for installation in early 2007. In addition, approvalhas been given to purchase long-lead items for a new well (K16) currentlyscheduled for a rig slot in mid-2007 which will target additional oil potentialfrom the Paleocene. In the Fife area, Premier's net production amounted to 1,268 bopd, slightlybelow expectation due to a number of minor operational problems. Production fromScott and Telford, which was steady during the period and in line with budget,accounted for the remainder of net production. On the Froy field in Norway acquisition of a 3D seismic survey was completed andtogether with existing data is being processed. Development planning isprogressing through the concept selection phase. The partnership plans to makethe declaration of commerciality around year-end followed by the submission ofthe plan of development in the first half of 2007. Exploration & Appraisal In addition to expanding the North Sea exploration portfolio, Premier is focusedon maturing the prospect inventory to generate prospects for drilling, often byfarming out the prospect so that the company's costs in the well are fully paidby others. This was the case in the UK 21/6a-7 well targeting the Palominoprospect that was plugged and abandoned as a dry hole in January 2006. Theresults from the well are being used to fully evaluate the remaining prospectsin this area. Early in 2006 Premier took up a 100 per cent stake in the UK Fife area blocks 39/1c and 39/2c with the aim of drilling the 39/2c-Peveril prospect. The blockshave been successfully farmed out and plans are in place to drill the 39/2cPeveril prospect during the final quarter of 2006. Premier will remain asoperator and retain a 30 per cent interest in these blocks. The cost of the 39/2c well will be paid for by the farminees. The Peveril prospect has potentialfor 40 mmbbls within the Jurassic Fife-Fulmar sandstones and an upside of over80 mmbbls. It is located only 10 km south of the Fife field production facilityand so in a success case could be tied back at low cost to these existingfacilities. Interpretation of recently reprocessed 2D and 3D surveys is proceeding acrossPremier's other UK acreage in the Central and Southern North Sea. Drillingdecisions on these assets are expected later in the year. In Norway, Premier was awarded five licences in the APA licensing round inDecember 2005. Work programmes have progressed swiftly during the first sixmonths of the year. These licences do not carry drilling commitments and so anumber of seismic reprocessing programmes are under way which will determinewhether we enter the second phase when we will assume a well obligation. Premier opened an office in Stavanger in May, and is also in the process ofqualifying under Norwegian regulations as an Operator. WEST AFRICA The first half of 2006 has been a busy and productive period in West Africa,with the commencement of production from Chinguetti and the preparations for thedrilling of two high impact wells in Guinea Bissau. Production & Development The company reached an important milestone in Mauritania with the commencementof production from the Chinguetti oil field on 24 February. This deep waterdevelopment, located 90 km west of Nouakchott is operated by Woodside and is asub-sea tie-back to the Berge Helene FPSO. Production commenced at a rate ofover 60,000 bopd, although at the end of the first half of 2006 the rate haddeclined to about 37,000 bopd (Premier net 3,000 bopd) due to unexpectedreservoir complexity. The joint venture is planning to drill new developmentwells in late 2006 and 2007 to increase production. In view of the reducedproduction performance, the operator is currently reviewing its estimates forproved and probable reserves. This is likely to lead to a reduction from thecurrent booked level of 9.7 mmbbls (net). Evaluation of potential development of the Tiof and Tevet oil discoveries in PSCB is advanced and could lead to a Final Investment Decision in early 2007. Bothfields present considerable technical and commercial challenges which are beingactively addressed by the joint venture. In January 2006 the Government of Mauritania informed the Woodside operatedjoint venture of a potential dispute relating to the validity of amendments tocertain legal documents (Avenants) relating to several PSCs in 2004, of whichPremier had involvement through PSC A and B. This dispute was resolved in June2006 and revised PSCs were signed in a ceremony in Nouakchott on 6 June. Exploration & Appraisal The exploration programme focused on PSC A with the spudding of the Colin-1 wellin late July 2006. A second exploration well is also scheduled to be drilled onthe nearby Kibaro prospect, which has a Cretaceous objective. Timing of theKibaro-1 well is being coordinated with higher priority development work onChinguetti but is expected to be drilled in late 2006. In Guinea Bissau, Premier has contracted the Global Santa Fe jack-up rig,Baltic, to drill two exploration wells commencing in early February 2007. Thetwo prospects, Eirozes and Espinafre, located 20 km south of the Sinapa-2, 2zoil discovery reported by Premier in April 2004, have combined pre-drillunrisked reserve potential of over 250 million barrels of oil equivalent (mmboe)gross. Offshore Gabon, Premier (as drilling operator for the Themis joint venture) hascontracted the Global Santa Fe rig, Adriatic VI, to drill a well on the ThemisPSC in August 2007. Nearby, the Dussafu joint venture has obtained an extension to the PSC term andis maturing prospects for 2008 drilling. In the Republic of Congo, Premier and partners made significant progress in theaward of Marine block IX, a highly attractive block located in proximity toexisting production, through promulgation of a Decree on 19 May. At the end offirst half 2006, the PSC was awaiting final Parliamentary and Presidentialapproval. Operations to fully evaluate the prospectivity of the block willcommence immediately upon formal ratification, which should occur in thirdquarter 2006. Early in 2006, Premier was awarded four PSCs in the Saharawi Arab DemocraticRepublic (SADR) with Ophir Energy as operator. These licences will becomeeffective when the current UN mandated process of securing autonomy in theregion is concluded. New business opportunities in the region are being actively pursued to build onthe attractive portfolio which the company has already secured. Working interest production by field (boepd) Six months to 30 June 2006 Full year 2005 Liquids Gas Total Liquids Gas TotalNorth SeaWytch Farm 3,214 41 3,255 3,882 117 3,999Kyle 1,542 520 2,062 2,019 1,591 3,610Others 1,683 81 1,764 1,998 139 2,137 6,439 642 7,081 7,899 1,847 9,746AsiaNatuna A 808 7,149 7,957 867 7,727 8,594Kakap 1,330 2,357 3,687 1,362 2,078 3,440 2,138 9,506 11,644 2,229 9,805 12,034 Middle East-PakistanBhit 18 2,909 2,927 17 2,768 2,785Zamzama 178 3,885 4,063 161 3,496 3,657Kadanwari - 1,183 1,183 - 1,227 1,227Qadirpur 51 3,944 3,995 51 3,755 3,806 247 11,921 12,168 229 11,246 11,475 West AfricaChinguetti 2,628 - 2,628 - - - 2,628 - 2,628 - - - Total Group 11,452 22,069 33,521 10,357 22,898 33,255 CONSOLIDATED INCOME STATEMENT Six months Six months Year to 31 to 30 June to 30 June December 2005 2006 2005 Unaudited Unaudited Note $ million $ million $ millionSales revenues 219.6 149.3 359.4Cost of sales 2 (85.5) (73.7) (176.5)Exploration expense (9.2) (2.1) (20.6)Pre-licence exploration costs (6.6) (3.6) (17.0)General and administration costs (8.2) (9.1) (19.6)Operating profit 110.1 60.8 125.7Interest revenue and finance gains 3 1.9 3.8 5.9Finance costs and other finance expenses 3 (20.5) (2.6) (7.0)Profit before tax 91.5 62.0 124.6Tax (57.8) (41.5) (86.0)Profit after tax 33.7 20.5 38.6Earnings per share (cent):Basic 41.2 24.9 47.0Diluted 40.9 24.7 46.6 CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSES Six months to Six months to Year to 31 30 June 30 June December 2005 2006 2005 Unaudited Unaudited $ million $ million $ millionPension costs - actuarial losses - - (2.2)Net losses recognised directly in equity - - (2.2)Profit for the period/year 33.7 20.5 38.6Total recognised income 33.7 20.5 36.4 RECONCILIATION TO NET ASSETS Six months to Six months to Year to 31 30 June 2006 30 June 2005 December 2005 Unaudited Unaudited $ million $ million $ millionNet assets at 1 January 376.1 354.1 354.1Total recognised income 33.7 20.5 36.4Adjustment relating to past restructuring - - 3.1Purchase of shares for ESOP Trust - (8.1) (8.5)Provision for share-based payments 1.8 0.4 2.9Issue of ordinary shares 0.2 0.7 1.3Repurchase of ordinary share capital - (11.5) (13.2)Currency translation differences 0.6 0.7 -Net assets at period/year end 412.4 356.8 376.1 CONSOLIDATED BALANCE SHEET At 30 June At 30 June At 31 2006 2005 December 2005 Unaudited Unaudited $ million $ million $ millionNon-current assets:Intangible exploration and evaluation assets 111.6 63.9 67.4Property, plant and equipment 569.0 567.8 576.6Investments in associates 1.1 1.1 1.1Deferred tax asset - - 0.8 681.7 632.8 645.9Current assets:Inventories 16.1 21.1 13.3Trade and other receivables 122.3 120.7 144.7Cash and cash equivalents 43.8 45.3 38.8 182.2 187.1 196.8Total assets 863.9 819.9 842.7Current liabilities:Trade and other payables (142.9) (109.5) (113.7)Current tax payable (50.3) (41.9) (38.8) (193.2) (151.4) (152.5)Non-current liabilities:Long-term debt - (54.1) (63.6)Deferred tax liabilities (206.9) (206.9) (198.3)Long-term provisions (41.7) (40.2) (41.0)Long-term employee benefit plan deficits (9.7) (10.5) (11.2) (258.3) (311.7) (314.1)Total liabilities (451.5) (463.1) (466.6)Net assets 412.4 356.8 376.1Equity and reserves:Share capital 73.2 73.2 73.2Share premium account 8.2 7.6 8.0Revenue reserves 329.1 276.0 293.6Capital redemption reserve 1.7 - 1.7Translation reserves 0.2 - (0.4) 412.4 356.8 376.1 CONSOLIDATED CASH FLOW STATEMENT Six months to Six months Year to 31 30 June to 30 June December 2006 2005 2005 Unaudited Unaudited $ million $ million $ millionOperating activities:Profit before taxation 91.5 62.0 124.6Depreciation, depletion and amortisation 42.4 32.8 68.0Exploration expense 9.2 2.1 20.6Pre-licence exploration costs 6.6 3.6 17.0Increase in inventories (2.8) (8.8) (1.0)Decrease/(increase) in trade and other receivables 38.3 8.8 (29.3)Increase/(decrease) in trade and other payables 22.0 (4.4) 5.4Interest received 0.8 0.5 1.0Interest revenue (0.7) (0.5) (1.0)Interest paid (2.1) (1.6) (3.5)Interest payable 2.0 1.5 -Finance costs 16.0 - 2.0Other finance expense/(income) 1.4 (2.2) 0.1Net operating charge for long-term employee benefit plans less (1.6) - (1.5)contributionsIncome taxes paid (50.0) (39.6) (86.4)Share-based payment provision 1.8 - 2.9Release of warranty provision (2.5) - -Net cash provided by operating activities 172.3 54.2 118.9 Investing activities:Capital expenditure (95.9) (62.0) (132.6)Pre-licence exploration costs (6.6) - (17.0)Disposal of intangible exploration and evaluation assets - - 4.0Net cash used in investing activities (102.5) (62.0) (145.6) Financing activities:Issue of ordinary shares 0.2 0.7 1.1Repurchase of ordinary shares - (22.2) (21.0)Repayment of long-term financing (65.0) - -Proceeds from long-term financing - 15.0 -Loan drawdowns - - 25.0Arrangement fee for new loan facility - - (1.4)Net cash (used)/from financing activities (64.8) (6.5) 3.7Currency translation differences relating to cash and cash - - 2.2equivalentsIncrease/(decrease) in cash and cash equivalents 5.0 (14.3) (20.8)Cash and cash equivalents at the beginning of the period/year 38.8 59.6 59.6Cash and cash equivalents at the end of the period/year 43.8 45.3 38.8 1. GEOGRAPHICAL SEGMENTAL ANALYSIS Six months Six months Year to 31 to 30 June to 30 June December 2006 2005 2005 Unaudited Unaudited $ million $ million $ millionSales and other operating revenues by origin:North Sea 77.6 64.8 169.6Asia 73.3 50.7 121.5Middle East-Pakistan 45.3 33.8 68.3West Africa 23.4 - - 219.6 149.3 359.4Operating profit/(loss) by origin:North Sea 38.9 9.9 32.2Asia 49.6 33.2 66.2Middle East-Pakistan 27.3 23.4 41.9West Africa - (0.6) (6.0)Other (5.7) (5.1) (8.6) 110.1 60.8 125.7 2. COST OF SALES Six months Six months Year to 31 to 30 June to 30 June December 2006 2005 2005 Unaudited Unaudited $ million $ million $ millionOperating costs 35.5 37.1 100.7Royalties 7.6 3.8 7.8Amortisation and depreciation of property, plant andequipment:Oil and gas properties 41.8 32.1 66.6Other 0.6 0.7 1.4 85.5 73.7 176.5 3. INVESTMENT REVENUE AND FINANCE COSTS Six months Six months Year to 31 to 30 June to 30 June December 2006 2005 2005 Unaudited Unaudited $ million $ million $ millionInterest revenue and finance gains:Short-term deposits 0.7 0.6 1.0Mark-to-market valuation of foreign exchange contracts 1.2 - -Exchange differences - 3.2 4.9 1.9 3.8 5.9Finance costs and other finance expenses:Bank loans and overdrafts (2.0) (1.5) (3.0)Unwinding of discount on decommissioning provision (0.9) (0.8) (1.7)Premium on commodity hedges and mark-to-market valuation (16.0) - (2.0)Long-term debt arrangement fees (0.2) - (1.2)Others - (0.3) (0.5)Exchange differences (1.4) - -Gross finance costs and other finance expenses (20.5) (2.6) (8.4)Interest capitalised during the period/year - - 1.4 (20.5) (2.6) (7.0) 4. ANALYSIS OF CHANGES IN NET CASH/(DEBT) Six months to Six months to Year to 31 30 June 2006 30 June 2005 December 2005 Unaudited Unaudited $ million $ million $ milliona) Reconciliation of net cash flow to movement in net cash/(debt):Movement in cash and cash equivalents 5.0 (14.3) (20.8)Proceeds from long-term loans - (15.0) (25.0)Repayment of long-term loans 65.0 - -Increase/(decrease) in net cash/(debt) in the period/year 70.0 (29.3) (45.8)Opening net (debt)/cash (26.2) 19.6 19.6Closing net cash/(debt) 43.8 (9.7) (26.2)b) Analysis of net cash/(debt):Cash and cash equivalents 43.8 45.3 38.8Long-term debt - (55.0) (65.0)Total net cash/(debt) 43.8 (9.7) (26.2) 5. OTHER NOTES Basis of preparation The interim statement does not represent statutory accounts within the meaningof Section 240 of the Companies Act 1985. The comparative financial information is based upon the statutory accounts forthe year ended 31 December 2005. Those accounts, upon which the auditors issuedan unqualified opinion, have been delivered to the Registrar of Companies anddid not contain statements under Section 237(2) or (3) of the Companies Act1985. The interim financial information has been prepared on the basis of theaccounting policies set out in the group's 2005 statutory accounts. Dividends No interim dividend is proposed (30 June 2005: $ nil). Earnings per share The calculation of basic earnings per share is based on the profit after tax andon the weighted average number of ordinary shares in issue during the period.The diluted earnings per share allows for the full exercise of outstanding sharepurchase options and adjusted earnings. Basic and diluted earnings per share are calculated as follows: Profit after tax Weighted average Earnings per share Unaudited number of shares Six months Six months Six months Six months Six months Six months to 30 June to 30 June to 30 June to 30 June to 30 June to 30 June 2006 2005 2006 2005 2006 2005 $ million $ million millions millions cents centsBasic 33.7 20.5 81.8 82.5 41.2 24.9Outstanding share options 0.1 0.1 0.7 0.8 * *Diluted 33.8 20.6 82.5 83.3 40.9 24.7 * The inclusion of the outstanding share options in the calculations produces a diluted earnings per share. Introduction We have been instructed by the company to review the financial information forthe six months ended 30 June 2006 which comprise the consolidated incomestatement, the consolidated balance sheet, the consolidated statement ofrecognised income and expense, reconciliation of net assets, the consolidatedcash flow statement and related notes 1 to 5. We have read the other informationcontained in the interim report and considered whether it contains any apparentmisstatements or material inconsistencies with the financial information. This report is made solely to the company in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe company, for our review work, for this report, or for the conclusions wehave formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures are consistent withthose applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with International Standards on Auditing (UK andIreland) and therefore provides a lower level of assurance than an audit.Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2006. Deloitte & Touche LLPChartered AccountantsLondon20 September 2006 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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